Two companies tapped to build second massive offshore-wind farm in N.J.

This story originally appeared on NJ Spotlight.

The Murphy administration awarded the largest procurement yet for offshore wind projects along the Eastern Seaboard, giving two developers the ability to triple the capacity of wind turbines in New Jersey, producing power for more than 1.6 million homes.

The winners of the state’s second solicitation for offshore wind projects will build a combined 2,658 megawatts of new capacity, adding to the 1,100 megawatts now under development by Ørsted’s Ocean Wind project off Atlantic City. Ørsted won the right to build another 1,148 megawatts for its Ocean Wind II project, while Atlantic Shores Offshore Wind’s 1,510-megawatt project was also approved. The latter is a joint venture of EDF Renewables and New Shell Energies LLC.

The announcement Wednesday by the New Jersey Board of Public Utilities could bolster the state’s goal of becoming a hub for the nascent offshore-energy sector by attracting two offshore developers to build along its coast. Perhaps more importantly the developer is committing to invest in ports in Paulsboro and at Artificial Island, where manufacturing plants for offshore and assembly of giant wind turbines will occur.

“This was a pivotal day, definitely a game changer,’’ said Gail Lalla, a climate manager at TRM Associates in Middletown, who noted it was two big offshore-wind companies competing in a solicitation.

Thousands of jobs?

Those ports are viewed as helping New Jersey become the core of the emerging offshore-wind industry and attracting the thousands of jobs clean-energy advocates believe will result as a new domestic supply chain develops to fuel the sector’s growth.

The largest previous procurement was by New York state, with 2,490 megawatts in January. New Jersey and New York appear to be engaged in a fight over which state will emerge as the hub of the offshore industry along the Eastern Seaboard. Originally, New Jersey had proposed a cap of 2,400 megawatts but increased it to 2,698 megawatts in the approval yesterday.

“Today’s award, which is the nation’s largest combined to date, further solidifies New Jersey as an offshore-winds supply-chain hub and leader in the offshore-wind industry in the United States,’’ Gov. Phil Murphy said in a statement.

Eric Miller, director of New Jersey Energy Policy at the Natural Resources Defense Council, praised what he said was “a bold step from the Board of the Public Utilities that cements New Jersey’s status as a leader in off-shore development in the region.”

“Not only is the announcement a win for the clime, it’s a win for New Jersey’s clean-energy economy,” Miller said.

The new projects will stretch from Ocean and Cape May counties and could put the Murphy administration on target to reach 7,500 megawatts of offshore-wind capacity by 2035. If all the projects are built, the BPU staff said it could reduce greenhouse gas emissions by about 5 million tons per year. The two projects are expected to create 7,000 full- and part-time jobs.

The projected cost

The projected cost is less than the first offshore-wind project awarded to Ørsted in 2019, according to Rate Counsel Director Stefanie Brand, who attributed the drop to the competitive solicitation conducted by the BPU.

“The more we see different competing bids on these contracts, the more we will see lower prices,’’ Brand said.

According to the BPU, the monthly ratepayer impact for the Atlantic Shores project is estimated to cost $2.21 for residential customers, $20.21 for commercial customers and $172.25 for industrial customers, once the wind turbines are operational, not expected until 2027-2028.

For the Ocean Wind II project, those costs are projected to be $1.28 a month for residential customers; $11.73 for commercial customers, and $99.91 for industrial customers. Both projections are based on the levelized cost of what utility ratepayers pay to subsidize the projects after revenues generated by them are returned to ratepayers.

In a statement, Joris Veldhoven, commercial and financial director for Atlantic Shores, said the company is thrilled to be moving forward with its project and cementing its commitment to deliver clean, reliable power to the Garden State. The project aims to begin construction in 2024.

Ocean Wind II will allow Ørsted to develop the remaining section of its federal lease area off the coast. “With the selection of Ocean Wind II, New Jersey is firmly at the heart of the American offshore wind industry,’’ said David Hardy, CEO of Ørsted North America.